World Bank Approves New Financing for Dominica

Introduction to the Financing

WASHINGTON, CMC -The World Bank Monday announced that it has approved new financing to support Dominica’s efforts to strengthen domestic revenue mobilization, enhance financial sector resilience, and promote biodiversity conservation and disaster preparedness to support better opportunities for its population.

“Dominica faces the dual challenge of managing high disaster vulnerability and fiscal fragility. This initiative supports strategic policy reforms vital for building resilience, generating sustainable revenue, and protecting Dominica’s extraordinary natural heritage,” said Lilia Burunciuc, World Bank Division Director for the Caribbean.

Background and Context

The World Bank said that the new Development Policy Credit comprises an envelope of US$24 million and that Dominica, known as the “Nature Island of the Caribbean,” possesses exceptional biodiversity and marine ecosystems, which underpin its tourism-dependent economy.

However, natural disasters and climate-related shocks have reduced the country’s development. Tropical Storm Erika in 2015 and Hurricane Maria in 2017 inflicted significant damage. While Dominica was spared the worst of Hurricane Beryl in July 2024, the storm still caused infrastructural damage and disrupted livelihoods across the island.

“These disasters and other shocks have significantly weakened the country’s public finances and financial system. Public debt surged to 118.2 percent of gross domestic product (GDP) in 2020 and remains high at 103 percent in 2024,” The World Bank said.

Objectives and Pillars of the Financing

The Washington-based financial institution said in response to these challenges, the Dominica Strengthening Fiscal and Climate Resilience Programmatic Development Policy Credit was developed to support Dominica’s reform agenda.

The operation supports policy measures to advance key economic and climate resilience reforms. This includes reforming excise and special taxes on fuel, alcohol, and sugary drinks that can harm health or the environment.

The financial institution said the reforms are expected to boost revenue, reduce greenhouse gas emissions, and support better public health outcomes. The operation also strengthens financial oversight of key institutions like the Dominica Agricultural Industrial and Development Bank and credit unions, enhancing financial sector stability.

The second pillar supports efforts to safeguard Dominica’s marine ecosystems and increase climate resilience. It includes establishing the world’s first marine protected area dedicated to sperm whales.

Expected Outcomes and Benefits

The World Bank said revenue from swim-with-the-whales permits is expected to rise by 177 percent by 2027, supporting conservation, livelihoods, and eco-tourism.

Additionally, the government is adopting a new risk-based asset management system for public buildings to enhance disaster preparedness and guide investment in resilient infrastructure.

The World Bank said that by 2027, 40 percent of public fixed assets will be inventoried and prioritized for risk mitigation, improving Dominica’s capacity to respond to future climate shocks.

Alignment with National Strategies and Funding

The initiative is aligned with Dominica’s National Resilience Development Strategy 2030 and the Climate Resilience and Recovery Plan 2020–2030. It was designed through extensive consultation with national stakeholders and development partners, notably the Caribbean Development Bank and the International Monetary Fund.

The International Development Association (IDA), the arm of the World Bank Group that supports low-income countries and small island economies, provides funding. IDA’s grants and low-interest financing help countries invest in their futures, improve lives, and create safer, more prosperous communities around the world.

Unlike traditional project financing, Development Policy Credits provide budget support to governments that have already implemented agreed-upon policies and institutional reforms. With this approval, funds will be disbursed to Dominica’s treasury to support budgetary priorities aligned with the country’s resilience strategy.

Conclusion

The World Bank’s approval of new financing for Dominica marks a significant step towards supporting the country’s efforts to build resilience, promote biodiversity conservation, and enhance disaster preparedness. The initiative is expected to have a positive impact on the country’s economy, environment, and population, and will help Dominica to achieve its development goals.

Frequently Asked Questions (FAQs)

A: The World Bank has approved a Development Policy Credit of US$24 million to support Dominica’s efforts to strengthen domestic revenue mobilization, enhance financial sector resilience, and promote biodiversity conservation and disaster preparedness.

Q: What are the main objectives of the financing?

A: The main objectives of the financing are to support Dominica’s reform agenda, advance key economic and climate resilience reforms, and promote biodiversity conservation and disaster preparedness.

Q: How will the financing be used?

A: The financing will be used to support budgetary priorities aligned with Dominica’s resilience strategy, including reforming excise and special taxes, strengthening financial oversight, and establishing a marine protected area dedicated to sperm whales.